Gold could see a rally of around 5 percent before year end, according to one strategist, bringing a respite for the precious metal which has fallen 25 percent year to date and is on course for its worst year since 1981.
Andrew Su, CEO of Compass Global Markets, said gold prices will rise 5 percent in the next few weeks leading up to the end of the year, from Wednesday's trading level of $1,257 per ounce.
"We have an end-of-year target of $1,320 for gold and a medium-term target of $1,450... I think $1,350 is a relatively modest target for the end of the year," he said.
(Read more: As funds get massively short, gold could spike)
Su said a number of factors are driving his more bullish sentiment. Firstly, as a contrarian investor the fact that so many analysts have turned bearish on the yellow metal is, for him, a clear signal to buy.
"When the market becomes overly bearish as it did yesterday, [we see it] as an indication to buy. There was a lot of news yesterday that hedge funds had increased their shorts to the highest level in five years and we took this opportunity to go long," he added.
On Tuesday data from the Commodity Futures Trading Commission showed hedge fund and money managers were the least bullish they have been on gold since June 2007. In the week ended December 3, short bets on gold increased by 4,557 to 79,631 lots, and longs slipped slightly to 106,405.
(Read more: Gold in 'flux' until taper timeline gets clearer)
Interestingly from June 2007 to March 2008, gold prices rose by 50 percent.
Other bullish factors that are set to drive gold higher, according to Su, will be the U.S. Federal Reserve's decision not to taper next year, despite increasing speculation that this will be the case.
This year, expectations of Fed tapering have prompted sharp sell offs in the gold price. This is because the end of quantitative easing is likely to lead to a rise in interest rates, making non-interest bearing assets like gold less attractive.
(Read more: Blink and you'll miss it! The mini-taper)
Su added that in his view gold has found a floor at $1,200 per ounce, meaning that a fall below this technical level could prompt a strong bounce to the upside.
"We believe that gold has formed a solid base at $1,220 for now and this level coincides with the approximate average global cost of production for the metal. Investors are very shy to take it down below that level last time we saw it below $1,200 it bounced very quickly," he said.
However, more bearish gold commentators argue that there are a number of overhanging macro-economic factors which suggest the yellow metal is heading for further pain.
(Read More: Gold suffers worst November since 1978)
"The Federal Reserve is going to exit from quantitative easing and we expect yields to rise, and when yields go higher commodity markets generally suffer, gold in particular," Alain Bokobza, head of global asset allocation at Societe Generale Corporate & Investment Banking, told CNBC on Wednesday.
Meanwhile, analysts at investment group Julius Baer warned that slowing demand from China was bound to put downward pressure on the price of gold.
"Fading Chinese investment demand is a new bearish theme to watch while higher interest rates, subdued inflation and reduced tail risks continue to weigh on Western world investors' willingness to pay from gold as insurance," the analysts said in a note.
Compass' Su acknowledged that gold was vulnerable to further falls but said he still sees it rising higher in a few months' time, spurred by fresh appetite for safe haven buying next year.
(Read More: China gold consumption set to cool in 2014)
"I think we'll see a renewal of the budget crisis in the U.S... that will cause some safe haven buying and I think we'll also see China growth slowing down to about 7 percent [in the first quarter of 2014]...that will bring back a bit of risk aversion to the markets and we'll see gold recover as a result," he said.
— By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie